Man Pleads Guilty in Plot to Defraud Broadway Producers

A former Long Island stockbroker accused of bilking the producers of a planned Broadway musical production of “Rebecca” pleaded guilty to federal fraud charges on Monday, admitting that he had conjured up fictitious overseas investors and a phantom loan as part of a sham effort to rescue the financially troubled show.

The fraud — involving a plot federal authorities called “stranger than fiction” — led to the collapse of the production, when the former stockbroker, Mark C. Hotton, after reporting that one of the investors had died from malaria, failed to help secure a promised $1.1 million loan. But Mr. Hotton had created the investor, along with three others, out of whole cloth, complete with addresses in Australia and South Africa and fake e-mail correspondence and agreements suggesting they would provide $4.5 million for the show, a musical adaptation of Daphne du Maurier’s psychological thriller.

Mr. Hotton, 47, pleaded guilty to two counts of wire fraud before Judge John G. Koeltl in United States District Court in Manhattan. Each wire fraud count carries a maximum sentence of 20 years in prison. But the office of Preet Bharara, the United States attorney in Manhattan, was expected to recommend a sentence of between 33 and 41 months in prison, according to an agreement signed by prosecutors and Mr. Hotton.

One count stemmed from the “Rebecca” fraud and the other involved a separate scheme to defraud a Connecticut-based real estate company in which he used some of the same ruses he employed to deceive the Broadway producers.

The convoluted fraud that derailed “Rebecca” was among the most spectacular scandals in modern Broadway history, and it left the show’s lead producers, Ben Sprecher and Louise Forlenza, reeling. Mr. Sprecher had already raised several million dollars to mount the musical on Broadway — and had spent much of that money on preproduction costs, as is routine — when Mr. Hotton’s scheme was revealed and the show was indefinitely postponed.

In a separate case, Mr. Hotton was also charged by federal prosecutors on Long Island with securing $3.7 million by creating sham invoices and selling that debt at a discount to unsuspecting companies. He is expected to appear in United States District Court in Central Islip before Judge Joanna Seybert on Tuesday afternoon to plead guilty to a single count of money laundering conspiracy in that case.

Mr. Hotton’s lawyer, Ira D. London, did not respond to a telephone call and e-mail message seeking comment late on Monday. But in remarks to reporters outside court, he suggested there was more drama yet to come. “Mr. Hotton has asked me to say there is a chapter yet to be written in this saga,” Mr. London said, according to the Associated Press. He declined to elaborate, saying only, “When it will be written you will know.”

An error has occurred. Please try again later.

You are already subscribed to this email.

Mr. Bharara said in a news release announcing the disposition in the “Rebecca” case: “With his guilty plea today, the curtain is finally closing on Mark Hotton’s elaborately staged fraud. Though his lies and deceits were the stuff of fiction, they caused real harm to his victims, and now he faces real consequences as a result — the prospect of jail.”

Ronald G. Russo, a lawyer for Mr. Sprecher and Ms. Forlenza, said they were pleased by the outcome of the case. Last fall, Mr. Hotton had continued to deny the fraud in the face of mounting evidence, and pleaded not guilty when he was arrested in October.

Mr. Russo said: “The damage he did to ‘Rebecca’ was enormous. However, despite his criminal conduct, Ben Sprecher has every reason to believe that ‘Rebecca’ will open on Broadway next year.”

Still determined to bring “Rebecca” to Broadway, Mr. Sprecher has been working for months to try to raise the $4.5 million that Mr. Hotton had claimed to line up for the show, initially expected to cost about $12 million.

Salvaging “Rebecca” is important to Mr. Sprecher not only because he believes in the musical’s artistry and commercial potential — his producing company will be liable to “Rebecca” investors to return their money if the production does not open on Broadway in 2014.

The guilty plea by Mr. Hotton does not directly influence the chances of “Rebecca” still making it to Broadway, though Mr. Sprecher could conceivably cite Mr. Hotton’s admission of guilt in conversations with investors who are frustrated that the musical remains in limbo. Mr. Sprecher has said that the Broadway production budget for “Rebecca” would now most likely be higher than $12 million.

A version of this article appears in print on July 30, 2013, on Page A17 of the New York edition with the headline: Plea by Man Who Made Up Broadway Show Investors. Order Reprints|Today's Paper|Subscribe